Bybit takes Franklin Templeton's tokenized money fund as collateral, and the release does not say which fund

What happened

Bybit announced a strategic collaboration with Franklin Templeton on 28 September 2026. Its first part is an off-exchange collateral programme: eligible clients pledge fund shares issued through Benji, Franklin Templeton's blockchain-integrated recordkeeping and transfer agency platform, through ByCustody, which the release calls "an institutional-grade custody platform", and receive USDT or USDC trading credit lines on Bybit. The shares stay in custody. "The value is mirrored within Bybit's trading environment", and clients keep earning the fund's yield while the credit supports their trading. Franklin Templeton's Sandy Kaul said that for institutions, "extending connectivity of the Benji Technology Platform to Bybit offers a trusted venue to put regulated, yield-bearing assets to work in digital markets". The collaboration's second part is a tokenized wealth product on the Bybit exchange and the Mantle chain for wallet-based investors, which Bybit and Mantle are to describe separately. Blockhead reports that the collateral arrangement is close to identical to one Franklin Templeton set up with Binance in February.

Why it matters

The design answers the question every exchange failure has raised for the firms that trade on it: how much of their money is on the venue when it goes. Here the collateral never reaches the exchange. The client's claim is a fund share at a custodian, and the exchange extends credit against a mirror of its value, so the collateral is meant to sit outside whatever happens to the venue. And the collateral is a money fund, so it goes on earning the fund's yield while it sits there, where cash posted to an exchange earns whatever the exchange pays on it. How far that protection goes depends on the custodian's distance from the venue. Blockhead describes ByCustody as Bybit's own institutional custody platform. The release says only that it is institutional grade, and CoinDesk calls it regulated without naming a regulator. A custodian owned by the exchange moves the collateral to another part of the same group, which is a narrower protection than the release's word "off-exchange" suggests.

What is not settled

The release does not name the fund, which clients are eligible, how much has been pledged or what haircut Bybit applies in turning fund shares into credit, and Blockhead says so too. CoinDesk writes that the pledged shares "represent about $686 million in net assets". That figure matches the net assets of the Franklin OnChain U.S. Government Money Fund at 31 August, $686,635,362.22 on the fund's own N-MFP3 filing, so it measures the whole fund and not anything pledged at Bybit, and the fund is identified here from the match rather than from the release. The reports also differ on reach. CoinDesk says the programme lets investors and wallet holders on the exchange pledge shares; the release confines it to eligible clients and describes the retail side as a separate product still to be announced. CoinDesk says Franklin Templeton's funds are already accepted by Binance and OKX; Blockhead names only Binance. Who operates and regulates ByCustody is not stated by any document read for this story.